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Friends,
This is my last post to you today, I promise. But I couldn’t resist telling you about Elon’s comeuppance. SpaceX crashed this week and I just got some of the details.
Remember when Musk became the world’s first trillionaire? No longer. SpaceX’s stock price has settled way down. It’s not even 10 percent over its initial public offering price. Which means Musk’s bag is down to around $900 billion.
The SpaceX crash wiped out just about all of SpaceX’s gains from the last two weeks, which has caused massive headaches for its average investors and initial buyers. Not quite a Ponzi scheme yet, but heading in that direction.
All this shows why we need a Securities and Exchange Commission that’s on the side of average investors and the public, and not bought off by today’s robber barons.
SpaceX started to crash with a report out Monday that, notwithstanding all the hoopla surrounding its IPO raising $85 billion in its first trading days, SpaceX wasn’t really flying all that high. In fact, it was floating a $20 billion bond sale to refinance its debts (mostly from its acquisition of X, on which Musk had put a lofty valuation.)
Since Musk took over X in 2022, the platform has lost almost 80 percent of its market value. No surprise. I mean, who wants to read a bunch of rightwing rants?
To make matters worse, xAI, on which Musk also put a sky-high valuation before merging it into SpaceX, has fallen way behind other American AI companies in the race to develop generative AI.
As of May, all of xAI’s co-founders had jumped ship, according to LinkedIn cofounder Reid Hoffman, who calls xAI a “complete train wreck.” Small wonder that credit-rating agencies Moody’s and Fitch have graded SpaceX’s debt just a few notches above junk.
At the time of SpaceX’s IPO, Musk priced SpaceX stock at roughly 100 times the company’s total revenue in 2025. This was ballsy, to say the least, given SpaceX’s consistent negative profitability and its failure to meet prior goals, to say nothing of its debt.
The wild valuation depended on a belief that Musk can colonize Mars, put a data center into space, establish interstellar travel, and accomplish other wild things that would eventually generate big profits — but are likely to generate zilch until most investor’s great grandchildren have kicked the bucket.
Let me remind you that because of its size, a big chunk of Americans’ retirement savings and pensions (as well as university endowments) are now automatically tied to SpaceX’s market value. Yet SpaceX insiders have been able to sell their shares sooner than is usually the case because that’s the way the IPO was structured.
Put all this together with the increasing likelihood that AI is turning into a bubble whose burst will make the South Sea Bubble and Tulip Bubble look like sparkling water by comparison.
Add in Trump’s fiasco of a war with Iran and its oil shock, his avowed intention to weaken the dollar, and the increasingly likely specter of stagflation in the United States, and you get a perfect storm.
Are Trump and Musk — two of the most despicable people the world — bringing on a global recession, or worse? We’ll soon find out.
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